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It began in a car shed in Chennai, the southern Indian city formerly known as Madras. The year was 2008 and AR Rahman, the most successful composer in Indian history, was looking for a site for a music conservatoire – a place where young Indians could receive the western classical training that he felt was missing in his country. The parking lot behind the family home was the only available space.

Fast-forward to the present. Buoyed by the success of Slumdog Millionaire, the Danny Boyle film for which he won Academy Awards for best original score and best original song in 2009, Rahman has exchanged Bollywood for Hollywood, and his KM Music Conservatory has moved from its humble backyard origins to a purpose-built home occupying 40,000 sq ft.

It now has 80 full-time students, a teaching staff from the UK, US and Russia as well as India, and academic tie-ups with advanced music colleges in London and Glasgow. Last month, a group of its students visited the Scottish city to take part in a concert of Rahman’s music. Next month, the BBC Scottish Symphony Orchestra will spend a week in Chennai giving concerts and masterclasses.

Rahman’s initiative is notable not only as a philanthropic gesture (he provides most of the funding) but also as an educational model in India. Western classical music and its disciplines stand on the sidelines in a subcontinent of 1.3bn people where almost the entire music market is generated by the film industry.

It is even more surprising when you consider that Rahman, who has notched up 400m album sales and has 16m followers on his Facebook page, is enjoying a new career in Tinseltown – which, by his own admission, exists on a different creative planet from both India and Europe. His current projects include Disney’s Million Dollar Arm, a biographical sports drama by Australian director Craig Gillespie (Lars and the Real Girl, Fright Night) and The Monkeys of Bollywood, a musical film to be directed by Kevin Lima (Enchanted) with lyrics by Stephen Schwartz (Godspell).

Rahman, 47, may be classically trained but he makes no claims to being a classical composer. Most of his output consists of beat-based, synthesiser-modulated songs, representing a fusion of Indian influences and western pop. He has put Indian music on the international map to a degree not known since Ravi Shankar, who popularised the sitar.

Dev Patel, star of ‘Slumdog Millionaire’, for which Rahman composed the score

Western composers, popular or classical, can only dream of Rahman’s commercial reach, yet he devotes time and energy to an educational project with Chopin and Beethoven at its core, in a country where western musical tuition is scarce and expensive. He wants talented Indians to share some of the opportunities he had as a boy in a musically affluent Tamil family. His childhood influences included Italian opera, American pop and recording sessions with his father, a film composer, for whom he played keyboard. After his father’s early death, he worked as a session player for bands and orchestras and took a diploma in western classical music through a scheme run by London’s Trinity College of Music. He started composing advertising jingles in 1987 and was later invited by Mani Ratnam, one of India’s best-known directors, to create the soundtrack for Roja (Rose), a Tamil-language thriller that won three national awards in 1992. That opened his career to the lucrative Hindi film market.

Rahman still performs. YouTube clips of his concerts show a serene figure sitting cross-legged centre stage, playing a hapji (a keyboard instrument with guitar frets) and surrounded by dancers, musicians and meticulously choreographed lighting. Despite clear western influences, the songs are inflected with gamakas, the fluid decorations characteristic of Indian melody. “It creates an emotion that is unparalleled,” he says. “The idea of music is to liberate the listener and lead him to a frame where he feels he is elevated.”

Born RS Dileep Kumar, he changed his name to Allah-Rakha Rahman after converting to Islam, his mother’s religion, aged 23. Self-effacing and quietly charming, Rahman is the opposite of your brash movie mogul – but neither is there much of the charismatic guru about him. He usually has a business manager by his side, and seems happier talking about music production software Logic Pro X than about Bollywood, which he says “is really just Mumbai. It creates the impression that all Indian film is about glitzy girls and dancing. I don’t like it.”

He describes Hollywood as “like a holiday for me. I meet people I have adored [from afar] all my life.” But he is under no illusions about the compromises involved in working there. In the past, he says, film composers would read the screenplay and come up with themes. “John Williams would play them on the piano to Steven Spielberg. It would then go to the scoring stage, to see how it sounded with an orchestra.”

Today, soundtracks must follow “the demands of the number-crunchers. We have to mock up the whole orchestra on synthesiser. The more dollars the studio producers put in, the less freedom we have. If the budget hits $100m, they get scared – they’ll take the existing score of a successful movie and expect composers to copy it, like wallpaper. The biggest challenge for any composer in Hollywood is to be as creative as possible within those boundaries.”

The dictates of US film producers made Rahman determined to set up his own production company, and he already has a storyline for his first film. His love of Indian cinema stems, he says, from its capacity to cross language and ethnic barriers and the way it communicates “a spiritual elevation that gives contentment to the heart. That’s how people on $50 dollars a month are able to survive. It’s all a state of mind, whether you’re low-income or high. Money is important, sure, but the goal is to give people a sense of happiness and fulfilment.”

About his nurturing of a conservatoire in Chennai he says, “I want young Indian composers to be able to do more than just film music. I want to give them the skills that will enable them to create their own palette of sounds, instead of having to write formulaic music. It doesn’t matter if they become sound engineers, producers, composers or performers – I want them to be as imaginative as they like. My aim is to expand sensibilities.”